Philippine exports, imports bounce back in March

MANILA, Philippines — The country’s trade of goods jumped in March from February, with both imports and exports posting significant upticks following the slight reopening of the economy.

Latest data from the Philippine Statistics Authority (PSA) showed that external trade in goods grew 22.5 percent to $15.78 billion in March from just 4.5 percent growth in February.

Exports jumped 31.6 percent in March to $6.68 billion, with most export destinations already posting increments. Imports leaped 16.6 percent, bringing the total import value to $9.1 billion.

In turn, the country’s trade deficit reached $2.41 billion, down 11.5 percent from $2.73 billion last year. External trade, however, may suffer a setback due to the reimposition of lockdown in April.

Economists are raising such scenario even if manufacturing has generally remained open. The impact would likely be reflected in the April round of export and import data.

Union Bank of the Philippines chief economist Ruben Carlo Asuncion said the reopening of the economy in the first months of the year was a major factor in the upticks as more people went out and businesses opened. He said low base effect explained the higher import and export figure in March.

Exports and imports slumped 15.8 percent and 16.7 percent, respectively, in the same period last year.

Asuncion explained that the reopening of the economy in the first months of the year was a major factor as more people went out and businesses opened for more economic activity.

Total exports for March went up as electronic products, the country’s top export, registered a solid increase of 25 percent to $3.6 billion.

“Demand for electronics and subcomponents will likely remain high given the global chip shortage, a development that could bode well for this sector in the coming months,” ING Bank senior economist Nicholas Mapa said.

Other exports showed strength in March, particularly mineral products and other manufactured goods, which surged 196 percent and 116 percent, respectively.

The country’s top 10 exports, which cornered 80 percent of the total, jumped 40 percent to $5.67 billion during the month. Exports to 10 export destinations of the Philippines increased by 27.3 percent to $5.46 billion.

Growth was seen in exports to China, the United States, Thailand, Germany and Taiwan. China was the top export destination totaling $1.07 billion, 14 percent of total exports.

Meanwhile, inbound shipment of goods and services continued to expand, still due to low base, as well as corporate demand for imports and other inputs.

Most import sectors expanded during the month led by raw materials, capital goods and consumer imports. China is still the country’s biggest supplier of imported goods at $2.13 billion, almost 25 percent of the total.

“We expect the base effect induced expansion for both exports and imports to continue in the coming months with the Philippine economy relatively more open in 2021 compared to last year,” Mapa said.

Despite the sharp swings for both exports and imports, the country’s overall trade deficit stayed modest at $2.4 billion, which should translate to a current account surplus and near-term support for the Philippine peso.

Asuncion said the March trade balance will bode well for the first quarter gross domestic product results but it will not be enough to buoy performance to positive territory.

“We are expecting first quarter GDP growth print to have settled at -3.6 percent and this decline was largely based on the lack of consumption or domestic demand. Employment has improved but may not be enough to support positive economic growth,” Asuncion said.

He added that it is possible that the government may hit its trade balance targets for the year but this will depend on several factors, including further reopening of the economy, more substantial fiscal stimulus and faster rollout of the COVID-19 vaccination program.

Mapa, on the other hand, said trade deficit will remain relatively manageable at around $2.5 billion as corporate demand for the US dollar is weighed down by dimming growth prospects as partial lockdown measures are still in place more than a year into the pandemic.